If you’ve been following the news over the past few months, you’ve no doubt heard that the popular crypto lending platform Celsius is about to collapse. Now it turns out that Celsius’s liquidity problems are even bigger than originally thought. Celsius is struggling with a balance sheet deficit of USD 2.85 billion, which is more than twice the amount originally reported.
Big problems for Celsius
A new August 14 bankruptcy report tells us that Celsius’s debt is actually $2.85 billion, instead of the company’s previous claims of $1.2 billion. The report states that Celsius has a total of $6.6 billion in debt, against $3.8 billion in assets.
In the initial bankruptcy report, the company spoke of $4.3 billion in assets, against $5.5 billion in debt. This would result in a deficit of $1.2 billion. There is a chance that the current correction the market is going through will not be in Celsius’ favor. After all, a large part of the assets consists of crypto, which is again worth a lot less.
CEO Alex Mashinsky traded with Celsius funds
In the months leading up to Celsius’s collapse, CEO Alex Mashinsky has personally taken control of the company’s funds. According to the Financial Times, Mashinsky began trading with Celsius funds in January ahead of the Federal Reserve meeting. Mashinsky feared that prices would fall as a result of interest rate hikes, according to the Financial Times, and decided to overrule his team of experienced traders.
In one deal, Mashinsky would have decided to sell hundreds of millions of dollars worth of Bitcoin, only to buy it back a day later at a loss. If the Financial Times information is correct, Celsius lost $50 million on active crypto trading in January alone. A loss that, it now turns out, is almost entirely attributable to Alex Mashinsky. Mashinsky’s peculiar demeanor led to a conflict with the head of investment, Frank van Etten, who subsequently resigned from Celsius in February.